Time for your cheat sheet on this week’s top stories.
Canadian Real Estate
Bank of Canada Explains Toronto Condos, Describes A Ponzi Scheme
Canada’s central bank tried to explain Toronto’s condo market, and accidentally described a Ponzi. New home sales fell to just 1,599 units, the weakest since the early 1990s real estate crash. Meanwhile, developers are holding 3,975 completed and unsold homes, up 56.8% from a year prior. The BoC notes short-term profits have vanished, along with the investor-dominated demand. They explain the lack of short-term profits is throttling demand, effectively acknowledging these homes were never financially viable as housing, but served as speculative financial assets that people sometimes live in.
Canadian Mortgage Arrears Rate Hits A 5-Year High
Canadian bank data shows more borrowers are falling behind on their mortgage payments. The national arrears rate fell to 0.25% in November, the highest since 2017 (ex-pandemic). CBA member banks reported 12,380 mortgages at least 90 days past due, up 18.1% from last year. At the same time, their total mortgage book shrank 1% since the peak—making each delinquency hurt just a little more. The data clearly shows rising stress, but it remains unclear if that stress is being felt by households or speculators.
Canadian Job Vacancies: Alberta Surges, Ontario Matches Nunavut Lows
Canadian job vacancies fell 3.9% to 465,800 jobs in January, down 11.3% from last year and a six-year low—despite a 10% population surge over that period. The national weakness was almost entirely driven by Ontario, where the vacancy rate plunged to match Nunavut at 2.3%. In contrast, Alberta and Saskatchewan continue to see job vacancies rise, a trend observed in half the country. However, declines in Ontario and BC were steep enough to drag the national rate lower.
Canadian Job Losses 10x Larger Than Adjusted Data Shows
Canada’s seasonally adjusted employment fell by 25,000 jobs in January. Despite the drop, the unemployment rate managed to shed 0.2 points to 6.5%, attributed to fewer job seekers. The odd combo doesn’t quite match the clearer unadjusted data that shows 261,300 jobs lost, and the unemployment rate climbing to 6.7%, a five-month high. Actual job losses are 10x more than the headline data, highlighting how seasonal adjustments struggle to cope with non-seasonal market influences.
Ontario Mortgage Arrears Surge 4x, Highest Rate Since 2012
Ontario’s mortgage arrears rate more than quadrupled from record lows to 0.26% in November, the highest rate in over a decade. CBA member banks reported 5,622 delinquent mortgages at least 90 days past due, up 45.2% from last year. At the same time, their mortgage book in the province has contracted by 1.6% since the December 2022 peak, most within the past year. Banks are seeing more Ontario borrowers fall behind, while their market share in the province shrinks.
Toronto Real Estate
Toronto Real Estate Crash: Prices Down 27%, Inventory Hits A New High
Greater Toronto real estate continues to correct after one of the frothiest runs in history. The price of a typical home fell a 0.7% to $936,100 in January, now 27% below the 2022 peak. Existing home sales came in 19.3% lower than last year, while active listings hit a record 18,900 units. Combined with an equally weak demand balance in the new construction market, it’s not easy to see how this downward pressure is resolved in the near term.
Vancouver Real Estate
Vancouver Real Estate Enters Second-Wave Correction, Inventory Soars
Greater Vancouver home prices have only made a modest correction since peaking in 2022, but that may change fast. The price of a typical home in the region fell 1.2% (-$13,400) to $1.1 million in January, as sales plunged 28.7% and inventory climbed 9.9%. After years of moving sideways, the demand balance is weakening and applying more downward pressure. A trend further amplified by the region’s growing supply of newly completed and unsold homes.
How did Canadians become so stupid?
New Luxury USA houses cost 400K or less
USA Farms cost 100K or less